Posts Tagged ‘Dale Tice’

Landowners in Wyoming County get some good protections, attorney says.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The lease that Chesapeake Energy is offering to Wyoming County Landowners group members is clearly a compromise between landowners and the company, according to an experienced gas-law attorney, but includes “many of the protections that we like to see for landowners are built into this lease.”

Dale Tice, an attorney with Williamsport-based Greevy and Associates who has clients in the Wyoming group, characterized the wording in the lease offer as “very competitive with the leases we’ve seen.”

Tice, whose office has gained somewhat of an expertise in gas law since companies began descending on Lycoming County a few years ago, said he usually disapproves of a five-year re-leasing option being available to companies, but noted that it’s “understandable” why Chesapeake would want that because it’s leasing so much land that it will take years to explore the whole area.

He also said that the $20-per-year fee paid if a well is shut off to eliminate production during a bad market “is as good as they’re going to do.”

While Tice declined to identify negatives in the lease and cautioned that his comments shouldn’t be construed as legal advice, he noted several positives: including in-depth wording to limit production-unit sizes, termination of the lease on land that isn’t part of a production unit, the company’s responsibility to pay property-tax rollbacks on Clean and Green properties and mutual written agreement on placement for wells, pipelines and other infrastructure. Additionally, he said, the lease requires that all infrastructure sited on a property must be tied into gas production at the property.

“There’s always somewhat of a question there because, although the gas company and the landowner must mutually agree in writing as to the location, the gas companies always add some language that says lessors can’t be unreasonable” about siting infrastructure, he said.

Though there is no specific reference to siting waste-deposit wells on the properties, “sometimes,” he said, “if they (landowners) don’t give them (drilling companies) the right, they don’t need to take it out, so to speak.”

The lease is “clearly the product of extensive dialogue between the parties,” Tice said. “I think this does a good job of striking a compromise where the landowner has a lot of good protections worked into it.”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Area group advises residents to be patient, don’t agree to low rates offered by drillers.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

ROSS TWP. – Gas-lease offers might be low, thanks to a lagging economy, but that’s not stopping drillers from proposing them.

Three gas companies are speaking with landowners in Luzerne County, and a fourth – Denver-based Whitmar Exploration Company – is covering leases, according to members of the South West Ross Township Property Group.

“Right now, they’re picking all this low-hanging fruit,” said Ken Long, a member of the group’s executive committee. “People are panicking to sign leases … because they want to get this monkey off their back.”

The in-depth, confusing and potentially disastrous decisions involved with signing a lease weigh on people, he said, and with offers crashing from one-time highs in the thousands of dollars per acre to Whitmar’s current $12.50 per acre, some landowners are eager to get whatever benefit they can and move on.

That, the committee warns, would be a mistake. “It’s not just going to be for today,” said Marge Bogdon, a member of the committee. “If you’re going to hurt your children or your grandchildren by signing a lease today, that’s bad.”

That’s why the committee has decided not to recommend Whitmar’s offer to their members and crafted 10 questions it says will combat “gas-rush fever.”

A large part of the rush is created, they say, by owners afraid they’ll miss out on everything if they don’t sign for peanuts now. Add to that pressure sales tactics levied by the companies, and the committee members foresee an ominous formula for rash, uninformed decision-making. They cite as example a recent missive from Conservation Services, the land-acquisition company employed by Whitmar. Announcing two meetings during which leases could be signed, the letter gave landowners six days to join before the offer was closed. Committee members said they received the notices with only about four days to decide. “If you only have two days to sign a lease, you can’t get a lawyer to look it over,” Bogdon warned.

Mark Stransky, another member of the committee, said he stopped by one of the signing meetings and found it “lightly but steadily attended.” Whitmar’s offer, as presented to the committee, was $12.50 per acre for the first two years, and the company would have the option to drop the lease after each year. In the third year, the company would pay a one-time bonus of $2,500 per acre to lease the land for the next four years.

“People are wondering if this is the only game in town,” Stransky said.

But the truth, the committee contends, is that lease offers will increase, not dry up, as the economy re-emerges, and that companies are likely cashing in on economic fears to score discounted leases. “You can lease with just about anybody,” Long said. “They’re taking everything they can at a really cheap price.”

“They’re coming out of the woodwork now with the Marcellus gas being proven,” Stransky said.

Near the beginning of the year, the group represented roughly 10,000 acres around Ross Township, but the committee members figured they’ve added on several thousand since then. They stress membership is nonbinding, and that landowners can opt out by writing a letter and waiting 10 days.

Though they receive no compensation for their efforts, they’re rewarded, the committee members say, by preventing their community from being spoiled. “If we weren’t part of this community, we wouldn’t be so concerned,” Bogdon said. “This is our home.”

And while they bear no animosity toward the drillers and landmen for their pushiness – “They’re salesmen; that’s their job,” Bogdon acknowledged – the committee members’ local ties, they say, are the best arguments for why their fellow landowners should hear them out. “Who’s going to tell you the truth, the people who are trying to help out the community, or the ones who are trying to make money off you?” Long asked.

10 Questions

If you go

The South West Ross Township Property Group’s executive committee has crafted these questions to help landowners scrutinize lease offers:

Has an attorney versed in oil and gas leases reviewed the lease?

Do I understand in detail exactly what I’m signing?

Are the terms and financial aspects of the lease acceptable, or will I regret signing it later?

Am I signing this lease just because a neighbor did or a landman claims a neighbor did?

Would waiting be more beneficial?

Can I afford to wait?

Does the lease protect everything I want protected?

What does my property owner group think about this lease?

What would my dad say?

Am I being pressured to sign this lease, forcing me to skip over things on this list?

What: South West Ross Township Property Group’s next meeting

When: 7 p.m., Tuesday

Where: Sweet Valley Church of Christ

Why: Dale Tice, an attorney with gas-lease experts Greevy & Associates, will speak.

More info: Call 570-256-4488 for an informative phone message or go to: www.rosstwpgas.com

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Topics like reporting leasing income, transferring leases to beneficiaries to be covered.

The temptation to just sign could seem irresistible. With a few strokes of the pen, some people in the region are being offered the chance to completely change their lives with natural gas leases.

But first, they’re warned, make peace with the fact that the next person will get more. Check the maps, they’re told, check the deed, hire a lawyer, test the water. How much environmental damage is acceptable? How about hassles to daily life?

For those not involved, think Beverly Hillbillies, minus that improbable shot, and then exchange the endearing high jinks for hours of tedious title searching, legal work and stressful decisions with lifelong implications.

So who could blame anyone for simply signing and hiding behind the wads of cash? Well, their children, for one. Because with the great benefits of gas royalties come the great responsibilities of taxation and profit allocation, and, if they’re ignored, the great headaches of the judicial system and familial infighting.

“People are just seeing the (money) as a way to pay taxes … and not thinking about having to report it to the IRS and the tax implications that could have on them … or thinking about general financial planning or investing,” wrote Donna Skog Grey in an e-mail.

Grey, who works for the Penn State Cooperative Extension in Luzerne County, says the extension has been fielding questions on gas leases, environmental issues and lessee rights. What to do with the money, however, hasn’t come up often, she noted, which is why the extension is sponsoring workshops on what to do after the lease is signed but before the money rolls in.

One is planned for Lake-Lehman Junior/Senior High School on Aug. 25.

“There may be some strategies available to reduce the income tax,” said Dale Tice, an attorney with Greevy & Associates, a Williamsport law firm consulting on gas leases. “That’s something they would want to work out with their accountant or financial advisor prior to receiving the payment.”

The workshop will cover various topics, including how to report leasing income – the cash bonuses are just like regular income – transferring leases to beneficiaries and investment options.

“Certainly the cash-bonus payment is an issue,” Tice said. “It could push somebody up into a higher tax bracket. … You’re looking at a large potential tax hit, and without using the strategies that are available, you’ve got issues (in the event of) divorce, creditors.”

To add to confusion, there are health-care implications with elderly lessees who are currently eligible for Medicare or Medicaid, he said.

He noted some families are creating limited-liability companies to distribute the proceeds, and that family limited partnerships can make dividing up ownership of the lease similar to issuing stock.

“Really, the issue here is providing governance, keeping the parents in control of the resource while they’re alive, but at the same time providing for an orderly and easy shift of equity to the next generation,” Tice said. “I don’t think that you have to have it necessarily worked out before you receive your cash-bonus payment, but certainly there’s no disadvantage to thinking about these issues earlier rather than later.”

If you go

A natural gas-leasing workshop entitled “Managing Natural Gas Lease and Royalty Income” is scheduled for 7 p.m. to 9:30 p.m. Monday, Aug. 25 at the Lake-Lehman Junior/Senior High School. The cost is $10 per person. To make reservations, call the Penn State Cooperative Extension at 1-888-825-1701.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Experts tell landowners to understand everything they are signing related to leases.

LEHMAN TWP. – Natural-gas drillers seem to be taking “a wait-and-see attitude” right now, according to Ken Balliet, a Penn State Extension director well versed in gas-lease issues.

If exploratory wells being drilled this summer are productive and some state regulatory issues are ironed out, gas-lease offers could jump, he said.

But as anticipation builds over natural-gas drilling in the region, here’s one thing landowners can expect.

“As soon as you sign a lease, in a few days or weeks, the price (others sign leases for) is going to go up,” Balliet said. “You’ve gotta understand this is still a highly speculative play.”

That said, landowners have many other issues to consider beyond the bottom line, according to other experts who spoke at a gas-lease workshop on Monday evening at Lake-Lehman High School. There are environmental, liability, property rights and payment issues that should be considered.

For Luzerne County landowners who are undergoing property reassessment, another concern is retaining the land’s “clean and green” tax abatement status. Dale Tice noted that the financial risk could be transferred to the drilling company. Tice, an oil and gas attorney, said an addendum could be added to leases to require drillers to pay any rollback taxes.

Another important lease consideration for farmers is making sure the drillers isolate the topsoil during excavation, pointed out Joe Umholtz, an oil and gas program manager with the state Department of Environmental Protection. DEP doesn’t have a regulation requiring that, he said.

Tice also mentioned inserting compensation clauses for crop loss and land damage.

Beyond soil and groundwater pollution or water usage, landowners should consider the sound pollution from compressor stations and other machinery.

While all the issues probably won’t deter wildlife indefinitely, drillers can arrive at any time of year, so owners should prepare accordingly for hunting seasons, the experts said.

Regarding payments, owners should be aware that companies currently deduct transportation costs for getting the gas to market, Tice said, but legislation is pending to ban that. Also, while companies might offer owners the opportunity to use as much gas as they want, the pressures involved make it practically unreasonable, so Tice suggested that owners negotiate for payments in lieu of the gas.

It’s also important, he said, to restrict lease rights to only what might come up from the well because a broader lease might allow extraction of other minerals.

Finally, he advised against allowing options to re-lease land, but instead offer the first right to refuse a new lease offer.

“If they drill a well, that means you’ve got one chance to get this lease correct. You need to be sure you understand everything you’re signing,” he said.

Copyright: Times Leader